UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2021~~2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-38462

NLIGHT, INC.

(Exact name of Registrant as specified in its charter)

Delaware

91-2066376

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification Number)

4637 NW 18th Avenue

Camas, Washington 98607

(Address of principal executive office, including zip code)

(360) 566-4460

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class	Trading Symbol	Name of Exchange on which Registered
Common Stock, par value $0.0001 per share	LASR	The Nasdaq Stock Market LLC

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

☒

Accelerated Filer

☐

Non-Accelerated Filer

☐

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August ~~3, 2021,~~1, 2022, the Registrant had ~~43,198,143~~45,095,519 shares of common stock outstanding.


TABLE OF CONTENTS
			Page

Part I. Financial Information			1
Item 1. Unaudited Interim Financial Statements			1
Consolidated Balance Sheets: June 30,~~, 2021~~ 2022 and December 31, ~~2020~~2021 (unaudited)			1
Consolidated Statements of Operations: ~~Three~~Three and Six Months Ended June 30,, 2022 and 2021 ~~and 2020~~ (unaudited)			2
Consolidated Statements of Comprehensive Loss: ~~Three~~Three and Six Months Ended June 30, 2022 and 2021 ~~and 2020~~ (unaudited)			3
Consolidated Statements of Stockholders' Equity: Three and Six Months Ended June 30,, 2022 and 2021 ~~and 2020~~ (unaudited)			4
Consolidated Statements of Cash Flows: Six Months Ended June 30,, 2022 and 2021 ~~and 2020~~ (unaudited)			6
Notes to Consolidated Financial Statements (unaudited)			7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			16
Item 3. Quantitative and Qualitative Disclosures About Market Risk			2324
Item 4. Controls and Procedures			2324
Part II. Other Information			2426
Item 1. Legal Proceedings			2426
Item 1A. Risk Factors			2426
Item 6. Exhibits			2427
Signatures			2628

Table of Contents

PART I ~~- FINANCIAL INFORMATION~~

ITEM 1. ~~UNAUDITED INTERIM~~ FINANCIAL STATEMENTS

nLIGHT, Inc.

Consolidated Balance Sheets

(In thousands)

(Unaudited)

As of
June 30, 2021 December 31, 2020
Assets
Current assets:
    Cash and cash equivalents $ 175,364 $ 102,282
Accounts receivable, net of allowances of $298 and $367 36,829 31,820
    Inventory 63,296 54,706
    Prepaid expenses and other current assets 11,568 11,767
          Total current assets 287,057 200,575
Restricted cash 250 291
Lease right-of-use assets 17,887 12,302
Property, plant and equipment, net of accumulated depreciation of
$70,216 and $66,262
49,378 44,480
Intangible assets, net of accumulated amortization of $7,693 and $6,280 6,519 8,345
Goodwill 12,457 12,484
Other assets, net 5,026 5,167
          Total assets $ 378,574 $ 283,644
Liabilities and Stockholders’ Equity
Current liabilities:
     Accounts payable $ 25,677 $ 21,057
     Accrued liabilities 15,564 15,321
     Deferred revenues 2,666 2,528
     Current portion of lease liabilities 2,921 2,273
     Current portion of long-term debt 0 184
          Total current liabilities 46,828 41,363
Non-current income taxes payable 6,882 7,556
Long-term lease liabilities 15,505 10,375
Long-term debt 30 215
Other long-term liabilities 4,683 4,221
          Total liabilities 73,928 63,730
Stockholders' equity:
  Common stock - $0.0001 par value; 190,000 shares authorized, 43,181 shares issued and outstanding at June 30, 2021, and 39,793 shares issued and outstanding at December 31, 2020 15 15
     Additional paid-in capital 457,480 358,544
     Accumulated other comprehensive loss (424) (259)
     Accumulated deficit (152,425) (138,386)
          Total stockholders’ equity 304,646 219,914
          Total liabilities and stockholders’ equity $ 378,574 $ 283,644


	As of
	June 30, 2022		December 31, 2021
Assets
Current assets:
Cash and cash equivalents	$	70,633	$	146,534
Marketable securities	50,000		—
Accounts receivable, net of allowances of $300 and $303	45,944		41,574
Inventory	80,189		73,746
Prepaid expenses and other current assets	14,617		15,350
Total current assets	261,383		277,204
Restricted cash	250		250
Lease right-of-use assets	15,357		17,048
Property, plant and equipment, net	62,248		56,101
Intangible assets, net	5,297		6,698
Goodwill	12,359		12,420
Other assets, net	3,580		3,897
Total assets	$	360,474	$	373,618

Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	23,318	$	26,347
Accrued liabilities	13,138		14,730
Deferred revenues	2,034		1,629
Current portion of lease liabilities	3,032		3,066

Total current liabilities	41,522		45,772
Non-current income taxes payable	6,991		7,149
Long-term lease liabilities	14,117		14,612

Other long-term liabilities	3,990		3,952
Total liabilities	66,620		71,485
Stockholders' equity:

Common stock - $0.0001 par value; 190,000 shares authorized, 45,074 and 44,248 shares issued and outstanding at June 30, 2022, and December 31, 2021, respectively	15		15
Additional paid-in capital	483,410		470,760
Accumulated other comprehensive loss	(2,551)		(587)
Accumulated deficit	(187,020)		(168,055)
Total stockholders’ equity	293,854		302,133
Total liabilities and stockholders’ equity	$	360,474	$	373,618

See accompanying notes to consolidated financial statements.

Table of Contents

nLIGHT, Inc.

Consolidated Statements of Operations

(In thousands, except per share data)

(Unaudited)


		Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020				2022		2021		2022		2021
Revenue:	Revenue:										Revenue:
Products	Products	$	53,561	$	45,104	$	100,896	$	82,034		Products	$	48,180	$	53,561	$	99,241	$	100,896
Development	Development	15,552		7,034		29,562		13,319			Development	12,647		15,552		26,045		29,562
Total revenue	Total revenue	69,113		52,138		130,458		95,353			Total revenue	60,827		69,113		125,286		130,458
Cost of revenue:	Cost of revenue:										Cost of revenue:
Products	Products	34,240		32,597		64,635		60,497			Products	33,683		34,240		69,451		64,635
Development	Development	14,548		6,485		27,853		12,299			Development	11,759		14,548		24,273		27,853
Total cost of revenue	Total cost of revenue	48,788		39,082		92,488		72,796			Total cost of revenue	45,442		48,788		93,724		92,488
Gross profit	Gross profit	20,325		13,056		37,970		22,557			Gross profit	15,385		20,325		31,562		37,970
Operating expenses:	Operating expenses:										Operating expenses:
Research and development	Research and development	14,282		9,472		25,992		18,010			Research and development	13,788		14,282		27,499		25,992
Sales, general, and administrative	Sales, general, and administrative	15,057		9,633		26,771		17,333			Sales, general, and administrative	11,914		15,057		22,689		26,771
Total operating expenses	Total operating expenses	29,339		19,105		52,763		35,343			Total operating expenses	25,702		29,339		50,188		52,763
Loss from operations	Loss from operations	(9,014)		(6,049)		(14,793)		(12,786)			Loss from operations	(10,317)		(9,014)		(18,626)		(14,793)
Other income (expense):	Other income (expense):										Other income (expense):
Interest income (expense), net	Interest income (expense), net	(32)		(65)		(106)		218			Interest income (expense), net	71		(32)		71		(106)
Other income (expense), net		118		(298)		144		(414)
Other income (loss), net											Other income (loss), net	(106)		118		(77)		144
Loss before income taxes	Loss before income taxes	(8,928)		(6,412)		(14,755)		(12,982)			Loss before income taxes	(10,352)		(8,928)		(18,632)		(14,755)
Income tax expense (benefit)	Income tax expense (benefit)	(1,038)		418		(716)		1,323			Income tax expense (benefit)	(10)		(1,038)		333		(716)
Net loss	Net loss	$	(7,890)	$	(6,830)	$	(14,039)	$	(14,305)		Net loss	$	(10,342)	$	(7,890)	$	(18,965)	$	(14,039)

Net loss per share, basic and diluted	Net loss per share, basic and diluted	$	(0.19)	$	(0.18)	$	(0.34)	$	(0.38)		Net loss per share, basic and diluted	$	(0.23)	$	(0.19)	$	(0.43)	$	(0.34)

Shares used in per share calculations, basic and diluted	Shares used in per share calculations, basic and diluted	42,313		38,177		41,187		38,003			Shares used in per share calculations, basic and diluted	44,178		42,313		43,919		41,187

See accompanying notes to consolidated financial statements.

Table of Contents

nLIGHT, Inc.

Consolidated Statements of Comprehensive Loss

(In thousands)

(Unaudited)

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Net loss $ (7,890) $ (6,830) $ (14,039) $ (14,305)
Other comprehensive loss:
Foreign currency translation adjustments, net of tax 497 333 (165) (163)
Comprehensive loss $ (7,393) $ (6,497) $ (14,204) $ (14,468)


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net loss	$	(10,342)	$	(7,890)	$	(18,965)	$	(14,039)
Other comprehensive loss:
Foreign currency translation adjustments, net of tax	(1,868)		497		(1,964)		(165)
Comprehensive loss	$	(12,210)	$	(7,393)	$	(20,929)	$	(14,204)

See accompanying notes to consolidated financial statements.

Table of Contents

nLIGHT, Inc.

Consolidated Statements of Stockholders' Equity

(In thousands)

(Unaudited)


			Three Months Ended June 30, 2021																		Three Months Ended June 30, 2022
		Common stock	Additional paid-in capital		Accumulated other comprehensive loss		Accumulated deficit			Total stockholders' equity							Common stock	Additional paid-in capital	Accumulated other comprehensive loss		Accumulated deficit		Total stockholders' equity
				Shares					Amount											Shares					Accumulated deficit	Amount		Total stockholders' equity

Balance, March 31, 2021			42,783		$	15	$	449,496		$	(921)	$	(144,535)	$	304,055
Balance, March 31, 2022																Balance, March 31, 2022					$	44,538	$	15					$	477,924	$	(683)	$	(176,678)	$	300,578
Net loss	Net loss		—		—		—			—		(7,890)		(7,890)		Net loss					—		—			—			—		(10,342)		(10,342)
Offering costs			—		—		(1)			—		—		(1)

Issuance of common stock pursuant to exercise of stock options	Issuance of common stock pursuant to exercise of stock options		101		—		196			—		—		196		Issuance of common stock pursuant to exercise of stock options					48		—			73			—		—		73
Issuance of common stock pursuant to vesting of restricted stock awards and units, net of stock withheld for tax	Issuance of common stock pursuant to vesting of restricted stock awards and units, net of stock withheld for tax		264		—		(4,567)			—		—		(4,567)		Issuance of common stock pursuant to vesting of restricted stock awards and units, net of stock withheld for tax					370		—			(2,468)			—		—		(2,468)

Issuance of common stock under the Employee Stock Purchase Plan	Issuance of common stock under the Employee Stock Purchase Plan		33		—		750			—		—		750		Issuance of common stock under the Employee Stock Purchase Plan					118		—			1,201			—		—		1,201
Stock-based compensation	Stock-based compensation		—		—		11,606			—		—		11,606		Stock-based compensation					—		—			6,680			—		—		6,680
Cumulative translation adjustment, net of tax	Cumulative translation adjustment, net of tax		—		—		—			497		—		497		Cumulative translation adjustment, net of tax					—		—			—			(1,868)		—		(1,868)
Balance, June 30, 2021			43,181		$	15	$	457,480		$	(424)	$	(152,425)	$	304,646
Balance, June 30, 2022																Balance, June 30, 2022					$	45,074	$	15		$	483,410		$	(2,551)	$	(187,020)	$	293,854


		Six Months Ended June 30, 2022
	Common stock		Additional paid-in capital			Accumulated other comprehensive loss		Accumulated deficit		Total stockholders' equity
		Shares			Amount
Balance, December 31, 2021		44,248	$	15		$	470,760	$	(587)	$	(168,055)	$	302,133
Net loss		—	—			—		—		(18,965)		(18,965)

Issuance of common stock pursuant to exercise of stock options		471	—			762		—		—		762
Issuance of common stock pursuant to vesting of restricted stock awards and units, net of stock withheld for tax		377	—			(2,546)		—		—		(2,546)
Restricted stock awards forfeited in connection with transition agreement		(140)	—			—		—		—		—
Issuance of common stock under the Employee Stock Purchase Plan		118	—			1,201		—		—		1,201
Stock-based compensation		—	—			13,233		—		—		13,233
Cumulative translation adjustment, net of tax		—	—			—		(1,964)		—		(1,964)
Balance, June 30, 2022		45,074	$	15		$	483,410	$	(2,551)	$	(187,020)	$	293,854

Six Months Ended June 30, 2021
Common stock Additional paid-in capital Accumulated other comprehensive loss Accumulated deficit Total stockholders' equity
Shares Amount
Balance, December 31, 2020 39,793 $ 15 $ 358,544 $ (259) $ (138,386) $ 219,914
Net loss — — — — (14,039) (14,039)
Proceeds from follow-on offering, net of offering costs 2,537 — 82,354 — — 82,354
Issuance of common stock pursuant to exercise of stock options 553 — 770 — — 770
Issuance of common stock pursuant to vesting of restricted stock awards and units, net of stock withheld for tax 265 — (4,598) — — (4,598)
Issuance of common stock under the Employee Stock Purchase Plan 33 — 750 — — 750
Stock-based compensation — — 19,660 — — 19,660
Cumulative translation adjustment, net of tax — — — (165) — (165)
Balance, June 30, 2021 43,181 $ 15 $ 457,480 $ (424) $ (152,425) $ 304,646

Table of Contents

Three Months Ended June 30, 2020
Common stock Additional paid-in capital Accumulated other comprehensive loss Accumulated deficit Total stockholders' equity
Shares Amount
Balance, March 31, 2020 38,473 $ 15 $ 341,042 $ (3,181) $ (124,929) $ 212,947
Net loss — — — — (6,830) (6,830)
Issuance of common stock pursuant to exercise of stock options 145 — 299 — — 299
Issuance of common stock pursuant to vesting of restricted stock awards and units, net of stock withheld for tax 193 — (2,146) — — (2,146)
Issuance of common stock under the Employee Stock Purchase Plan 39 — 685 — — 685
Stock-based compensation — — 6,037 — — 6,037
Cumulative translation adjustment, net of tax — — — 333 — 333
Balance, June 30, 2020 38,850 $ 15 $ 345,917 $ (2,848) $ (131,759) $ 211,325
nLIGHT, Inc.

Consolidated Statements of Stockholders' Equity

(In thousands)

(Unaudited)


		Three Months Ended June 30, 2021
	Common stock	Additional paid-in capital		Accumulated other comprehensive loss		Accumulated deficit			Total stockholders' equity
			Shares					Amount














Balance, March 31, 2021		42,783		$	15	$	449,496		$	(921)	$	(144,535)	$	304,055
Net loss		—		—		—			—		(7,890)		(7,890)
Proceeds from follow-on offering, net of offering costs		—		—		(1)			—		—		(1)
Issuance of common stock pursuant to exercise of stock options		101		—		196			—		—		196
Issuance of common stock pursuant to vesting of restricted stock awards and units, net of stock withheld for tax		264		—		(4,567)			—		—		(4,567)
Issuance of common stock under the Employee Stock Purchase Plan		33		—		750			—		—		750
Stock-based compensation		—		—		11,606			—		—		11,606
Cumulative translation adjustment, net of tax		—		—		—			497		—		497
Balance, Balance, June 30, 2021		43,181		$	15	$	457,480		$	(424)	$	(152,425)	$	304,646


		Six Months Ended June 30, 2021
	Common stock		Additional paid-in capital			Accumulated other comprehensive loss		Accumulated deficit		Total stockholders' equity
		Shares			Amount
Balance, December 31, 2020		39,793	$	15		$	358,544	$	(259)	$	(138,386)	$	219,914
Net loss		—	—			—		—		(14,039)		(14,039)
Proceeds from follow-on offering, net of offering costs		2,537	—			82,354		—		—		82,354
Issuance of common stock pursuant to exercise of stock options		553	—			770		—		—		770
Issuance of common stock pursuant to vesting of restricted stock awards and units, net of stock withheld for tax		265	—			(4,598)		—		—		(4,598)
Issuance of common stock under the Employee Stock Purchase Plan		33	—			750		—		—		750
Stock-based compensation		—	—			19,660		—		—		19,660
Cumulative translation adjustment, net of tax		—	—			—		(165)		—		(165)
Balance, Balance, June 30, 2021		43,181	$	15		$	457,480	$	(424)	$	(152,425)	$	304,646

Six Months Ended June 30, 2020
Common stock Additional paid-in capital Accumulated other comprehensive loss Accumulated deficit Total stockholders' equity
Shares Amount
Balance, December 31, 2019 38,084 $ 15 $ 336,732 $ (2,685) $ (117,454) $ 216,608
Net loss — — — — (14,305) (14,305)
Issuance of common stock pursuant to exercise of stock options 518 — 857 — — 857
Issuance of common stock pursuant to vesting of restricted stock awards and units, net of stock withheld for tax 209 — (2,157) — — (2,157)
Issuance of common stock under the Employee Stock Purchase Plan 39 — 685 — — 685
Stock-based compensation — — 9,800 — — 9,800
Cumulative translation adjustment, net of tax — — — (163) — (163)
Balance, June 30, 2020 38,850 $ 15 $ 345,917 $ (2,848) $ (131,759) $ 211,325

See accompanying notes to consolidated financial statements.

Table of Contents

nLIGHT, Inc.

Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


		Six Months Ended June 30,				Six Months Ended June 30,
		2021		2020				2022		2021
Cash flows from operating activities:	Cash flows from operating activities:						Cash flows from operating activities:
Net loss	Net loss	$	(14,039)	$	(14,305)		Net loss	$	(18,965)	$	(14,039)
Adjustments to reconcile net loss to net cash provided by operating activities:
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:							Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation	Depreciation	4,290		3,614			Depreciation	5,214		4,290
Amortization	Amortization	3,122		2,815			Amortization	2,329		3,122
Reduction in carrying amount of right-of-use assets	Reduction in carrying amount of right-of-use assets	1,632		1,425			Reduction in carrying amount of right-of-use assets	1,571		1,632
Provision for (recoveries of) losses on accounts receivable	Provision for (recoveries of) losses on accounts receivable	(72)		62			Provision for (recoveries of) losses on accounts receivable	6		(72)
Stock-based compensation	Stock-based compensation	19,660		9,800			Stock-based compensation	13,233		19,660
Deferred income taxes	Deferred income taxes	(11)		0			Deferred income taxes	(1)		(11)
Loss on disposal of assets		3		0
(Gain) Loss on disposal of assets							(Gain) Loss on disposal of assets	—		3

Changes in operating assets and liabilities:	Changes in operating assets and liabilities:						Changes in operating assets and liabilities:
Accounts receivable, net	Accounts receivable, net	(4,849)		3,012			Accounts receivable, net	(4,975)		(4,849)
Inventory	Inventory	(8,611)		(4,457)			Inventory	(7,383)		(8,611)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	175		(1,801)			Prepaid expenses and other current assets	663		175
Other assets		(905)		(2,131)
Other assets, net							Other assets, net	(656)		(905)
Accounts payable	Accounts payable	3,335		7,400			Accounts payable	(1,726)		3,335
Accrued and other long-term liabilities	Accrued and other long-term liabilities	1,347		1,243			Accrued and other long-term liabilities	(1,191)		1,347
Deferred revenues	Deferred revenues	133		1,519			Deferred revenues	421		133
Lease liabilities	Lease liabilities	(1,404)		(1,428)			Lease liabilities	(409)		(1,404)
Non-current income taxes payable	Non-current income taxes payable	(721)		234			Non-current income taxes payable	104		(721)
Net cash provided by operating activities		3,085		7,002
Net cash provided by (used in) operating activities							Net cash provided by (used in) operating activities	(11,765)		3,085
Cash flows from investing activities:	Cash flows from investing activities:						Cash flows from investing activities:
Acquisition of business, net of cash acquired	Acquisition of business, net of cash acquired	(291)		0			Acquisition of business, net of cash acquired	—		(291)
Purchases of property, plant and equipment	Purchases of property, plant and equipment	(7,962)		(17,040)			Purchases of property, plant and equipment	(12,893)		(7,962)
Capitalization of patents		(216)		(628)
Acquisition of intangible assets and capitalization of patents							Acquisition of intangible assets and capitalization of patents	(228)		(216)
Purchase of marketable securities							Purchase of marketable securities	(50,000)		—

Net cash used in investing activities	Net cash used in investing activities	(8,469)		(17,668)			Net cash used in investing activities	(63,121)		(8,469)
Cash flows from financing activities:	Cash flows from financing activities:						Cash flows from financing activities:
Proceeds from public offerings, net of offering costs	Proceeds from public offerings, net of offering costs	82,354		0			Proceeds from public offerings, net of offering costs	—		82,354
Proceeds from term loan		0		15,000
Principal payments on debt and financing leases		(399)		(45)

Principal payments on term loan, debt and financing leases							Principal payments on term loan, debt and financing leases	—		(399)
Payment of contingent consideration related to acquisition	Payment of contingent consideration related to acquisition	(326)		0			Payment of contingent consideration related to acquisition	—		(326)

Proceeds from employee stock plan purchases	Proceeds from employee stock plan purchases	750		685			Proceeds from employee stock plan purchases	1,201		750

Proceeds from stock option exercises	Proceeds from stock option exercises	770		857			Proceeds from stock option exercises	762		770
Tax payments related to stock award issuances	Tax payments related to stock award issuances	(4,598)		(2,157)			Tax payments related to stock award issuances	(2,546)		(4,598)
Net cash provided by financing activities		78,551		14,340
Net cash provided by (used in) financing activities							Net cash provided by (used in) financing activities	(583)		78,551
Effect of exchange rate changes on cash	Effect of exchange rate changes on cash	(126)		(27)			Effect of exchange rate changes on cash	(432)		(126)
Net increase in cash, cash equivalents, and restricted cash		73,041		3,647
Net increase (decrease) in cash, cash equivalents, and restricted cash							Net increase (decrease) in cash, cash equivalents, and restricted cash	(75,901)		73,041
Cash, cash equivalents, and restricted cash, beginning of period	Cash, cash equivalents, and restricted cash, beginning of period	102,573		117,293			Cash, cash equivalents, and restricted cash, beginning of period	146,784		102,573
Cash, cash equivalents, and restricted cash, end of period	Cash, cash equivalents, and restricted cash, end of period	$	175,614	$	120,940		Cash, cash equivalents, and restricted cash, end of period	$	70,883	$	175,614
Supplemental disclosures:	Supplemental disclosures:						Supplemental disclosures:
Cash paid (received) for interest, net		$	103	$	(316)
Cash paid for interest, net							Cash paid for interest, net	$	—	$	103
Cash paid for income taxes	Cash paid for income taxes	393		1,015			Cash paid for income taxes	189		393
Operating cash outflows from operating leases							Operating cash outflows from operating leases	1,914		1,621
Right-of-use assets obtained in exchange for lease liabilities	Right-of-use assets obtained in exchange for lease liabilities	7,224		12,408			Right-of-use assets obtained in exchange for lease liabilities	1,222		7,224
Accrued purchases of property, equipment and patents	Accrued purchases of property, equipment and patents	2,139		993			Accrued purchases of property, equipment and patents	1,650		2,139

See accompanying notes to consolidated financial statements.

Table of Contents

nLIGHT, Inc.

Notes to Consolidated Financial Statements

~~(Unaudited)~~

Note 1 - Basis of Presentation and New Accounting Pronouncements

Basis of Presentation

The accompanying unaudited consolidated financial statements of nLIGHT, Inc. and our ~~wholly owned~~wholly-owned subsidiaries have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). The unaudited financial information reflects, in the opinion of management, all adjustments necessary for a fair presentation of financial position, results of operations, stockholders’ equity, and cash flows for the interim periods presented. The results reported for the interim period presented are not necessarily indicative of results that may be expected for the full year. These consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our ~~2020~~ Annual Report on Form ~~10-K.~~10-K for the year ended December 31, 2021.

Critical Accounting Policies

Our critical accounting policies have not materially changed during the six months ended June 30, ~~2021~~2022, from those disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~

~~New Accounting Pronouncements~~

~~ASU 2016-13, ASU 2018-19, ASU 2019-04, ASU 2019-05 and ASU 2020-03~~

~~The Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2016-13,~~ ~~Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~, in June 2016. ASU 2016-13 replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. For assets measured at amortized cost, the new standard requires that the income statement reflects the measurement of credit losses for newly recognized financial assets, as well as the expected increases or decreases of expected credit losses that have taken place during the period. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. ASU 2016-13 was amended in November 2018, April 2019 and March 2020. We adopted ASU 2016-13, as amended, on January 1, 2021 on a prospective basis. The adoption did not have a material impact on our financial position, results of operations or cash flows.

~~ASU 2019-12~~

~~The FASB issued ASU 2019-12,~~ ~~Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~, in December 2019. ASU 2019-12 simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. We adopted ASU 2019-12 on January 1, 2021 on a prospective basis. The adoption did not have a material impact on our financial position, results of operations or cash flows.2021.

Note 2 - ~~Acquisitions~~

~~OPI~~Acquisition

On July 30, 2020, we acquired the outstanding shares of OPI Photonics S.r.l. (OPI), an Italian limited liability company, for cash consideration of ~~approximately~~ $1.6 million, $0.2 million of which ~~$0.2 million~~ was paid at closing with the remaining $1.4 million to be paid over the next 24 months. The acquisition price was allocated to the tangible and identified intangible assets acquired and liabilities assumed as of the closing date of the acquisition based upon their respective fair values, and the excess of purchase price over the fair value amounts representing goodwill. The fair values assigned to assets acquired and liabilities assumed were based on management’s best estimates and assumptions as of the reporting date and are considered preliminary. Changes to amounts recorded as assets or liabilities may result in corresponding adjustments to goodwill. Pro forma financial information has not been provided for the purchase as it was not material to our overall financial position.

~~During the three and six months ended~~As of June 30, ~~2021,~~2022, we owed OPI $0.7 million, which was included on our Consolidated Balance Sheets as a component of accrued ~~acquisition~~liabilities.

Note 3 - Revenue

We recognize revenue upon transferring control of products and services and the amounts recognized reflect the consideration we expect to be entitled to receive in exchange for these products and services. We consider customer purchase orders, which in some cases are governed by master sales agreements, to be the contracts with a customer. As part of our consideration of ~~$0.3 million~~the contract, we evaluate certain factors, including the customer's ability to pay (or credit risk). For each contract, we consider the promise to transfer products, each of which is distinct, as the identified performance obligations.

We allocate the transaction price to each distinct product based on its relative standalone selling price. Master sales agreements or purchase orders from customers could include a single product or multiple products. Regardless, the contracted price with the customer is agreed to at the individual product level outlined in the customer contract or purchase order. We do not bundle prices; however, we do negotiate with customers on pricing for the same products based on a variety of factors (e.g., level of contractual volume). We have concluded that the prices negotiated with each individual customer are representative of the stand-alone selling price of the product.

We often receive orders with multiple delivery dates that may extend across several reporting periods. We allocate the transaction price of the contract to each delivery based on the product standalone selling price and ~~$0.6 million, respectively, was paid~~invoice for each scheduled delivery upon shipment or delivery and recognize revenues for such delivery at that point, assuming transfer of control has occurred. Rights of return generally are not included in customer contracts. Accordingly, product revenue is recognized upon shipment or delivery, as applicable, and transfer of control. Rights of return are evaluated as they occur.

Revenues recognized at a point in time consist of sales of semiconductor lasers, fiber lasers and other related products. Revenues recognized over time generally consist of development arrangements that are structured based on our costs incurred. Because control transfers over time, revenue is recognized based on the extent of progress towards completion of the performance obligation. We generally use the cost-to-cost measure of progress for our contracts because it best depicts the transfer of control to the ~~sellers of OPI.~~customer. Billing under these arrangements generally occurs within one month after the work is completed.

Table of Contents

~~Note 3 - Revenue~~

The following tables represent a disaggregation of revenue from contracts with customers for the periods presented (in thousands):

Sales by End Market


		Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020				2022		2021		2022		2021
Industrial	Industrial	$	24,907	$	22,630	$	46,307	$	38,620		Industrial	$	21,899	$	24,907	$	45,895	$	46,307
Microfabrication	Microfabrication	20,274		14,300		35,489		24,719			Microfabrication	16,415		20,274		33,734		35,489
Aerospace and Defense	Aerospace and Defense	23,932		15,208		48,662		32,014			Aerospace and Defense	22,513		23,932		45,657		48,662
		$	69,113	$	52,138	$	130,458	$	95,353			$	60,827	$	69,113	$	125,286	$	130,458

Sales by Geography

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
North America $ 33,095 $ 20,494 $ 64,229 $ 41,540
China 18,759 21,495 34,336 33,537
Rest of World 17,259 10,149 31,893 20,276
$ 69,113 $ 52,138 $ 130,458 $ 95,353


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
North America	$	35,682	$	33,095	$	70,826	$	64,229
China	4,672		18,759		11,811		34,336
Rest of World	20,473		17,259		42,649		31,893
	$	60,827	$	69,113	$	125,286	$	130,458

Sales by Timing of Revenue

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Point in time $ 50,123 $ 45,273 $ 97,117 $ 82,203
Over time 18,990 6,865 33,341 13,150
$ 69,113 $ 52,138 $ 130,458 $ 95,353


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Point in time	$	45,448	$	50,123	$	93,663	$	97,117
Over time	15,379		18,990		31,623		33,341
	$	60,827	$	69,113	$	125,286	$	130,458

Our contract assets and liabilities are as follows (in thousands):


		Balance Sheet Classification	As of					Balance Sheet Classification	As of
			June 30, 2021		December 31, 2020				June 30, 2022		December 31, 2021
Contract assets	Contract assets	Prepaid expenses and other current assets	$	6,880	$	5,680	Contract assets	Prepaid expenses and other current assets	$	7,620	$	9,657
Contract liabilities	Contract liabilities	Deferred revenue and other long-term liabilities	3,152		2,985		Contract liabilities	Deferred revenues and other long-term liabilities	3,343		2,358

During the three and six months ended June 30, ~~2021,~~ 2022,we recognized revenue of ~~$2.3~~$0.1 million and ~~$3.7~~$1.5 million, respectively, that was included in the deferred revenue balances at the beginning of the ~~periods~~period as the performance obligations under the associated agreements were satisfied.

~~Table of Contents~~

Note 4 - Concentrations of Credit and Other Risks

The following ~~customers~~customer accounted for 10% or more of our revenues for the periods presented:

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
U.S. Government 20% 12% 20% 11%
Quick Laser Technology Co., Ltd. (1) 15% (1) 12%
Raytheon Technologies (1) 11% (1) 13%


	Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021


U.S. Government	16%	20%	16%	20%

~~(1)~~ ~~Represents less than 10% of total revenues~~

Table of Contents

Financial instruments that potentially expose us to concentrations of credit risk consist principally of accounts receivable. As of June 30, ~~2021~~2022, and December 31, ~~2020,~~2021, two customers accounted for approximately ~~34%~~27% and ~~43%~~two customers accounted for approximately 33%, respectively, of net accounts receivable. No other customers accounted for 10% or more of net accounts receivable at either date.

Note 5 - Marketable Securities

Marketable securities consist primarily of highly liquid investments with maturities of greater than 90 days when purchased. Our marketable securities are considered available-for-sale as they represent investments of cash and are available for current operations. As such, they are included as current assets on our Consolidated Balance Sheets at fair value with unrealized gains and losses included in accumulated other comprehensive loss. Any unrealized gains and losses that are considered to be other-than-temporary are recorded in other income (loss), net on our Consolidated Statements of Operations. Realized gains and losses on the sale of marketable securities are determined using the specific-identification method and recorded in other income (loss), net on our Consolidated Statements of Operations.

Unrealized gains and losses were immaterial in the three and six months ended June 30, 2022.

See Note 6 for additional information.

Note 56 - Fair Value of Financial Instruments

The carrying amounts of certain of our financial instruments, including cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued liabilities are shown at cost which approximates fair value due to the short-term nature of these instruments. The fair value of our term and revolving loans approximates the carrying value due to the variable market rate used to calculate interest payments.

~~We do not have any other significant financial assets or liabilities that are measured at fair value.~~

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The standard describes a fair value hierarchy based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:

•Level 1 Inputs: Observable inputs, such as quoted prices (unadjusted) in active markets for identical assets or liabilities at the measurement date.

•Level 2 Inputs: Observable inputs, other than Level 1 prices, such as quoted prices in active markets for similar assets and liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

•Level 3 Inputs: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Our financial instruments that are carried at fair value consist of Level 1 assets which include highly liquid investments and bank drafts classified as cash ~~equivalents.~~equivalents and marketable securities. Our fair value hierarchy for our financial instruments ~~consists of cash equivalents~~was as follows (in thousands):


		June 30, 2021									June 30, 2022
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Cash Equivalents:										Cash Equivalents:
Money market securities	Money market securities	$	156,893	$	0	$	0	$	156,893	Money market securities	$	46,977	$	—	$	—	$	46,977
Commercial paper	Commercial paper	1,873		0		0		1,873		Commercial paper	621		—		—		621
											47,598		—		—		47,598
Marketable Securities:										Marketable Securities:
U.S. treasuries										U.S. treasuries	50,000		—		—		50,000
Total	Total	$	158,766	$	0	$	0	$	158,766	Total	$	97,598	$	—	$	—	$	97,598

Table of Contents


		December 31, 2020									December 31, 2021
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Cash Equivalents:										Cash Equivalents:
Money market securities	Money market securities	$	74,084	$	0	$	0	$	74,084	Money market securities	$	126,900	$	—	$	—	$	126,900
Commercial paper	Commercial paper	1,584		0		0		1,584		Commercial paper	236		—		—		236
Total	Total	$	75,668	$	0	$	0	$	75,668	Total	$	127,136	$	—	$	—	$	127,136

Cash Equivalents

The fair value of cash equivalents is determined based on quoted market prices for similar or identical securities.

Marketable Securities

We classify our marketable securities as available-for-sale and value them utilizing a market approach that uses observable inputs without applying significant judgment.

Note 67 - Inventory

Inventory is stated at the lower of average cost (principally standard cost, which approximates actual cost on a first-in, first-out basis) and net realizable value. Inventory includes raw materials and components that may be specialized in nature and subject to obsolescence. On a quarterly basis, we review inventory quantities on hand in comparison to our past consumption, recent purchases, and other factors to determine what inventory quantities, if any, may not be sellable. Based on this analysis, we write down the affected inventory value for estimated excess and obsolescence charges. At the point of loss recognition, a new, lower-cost basis for that inventory is established, and subsequent changes in facts and circumstances do not result in the restoration or increase in that newly established cost basis.

Inventory consisted of the following (in thousands):


		As of					As of
		June 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
Raw materials	Raw materials	$	25,289	$	21,410	Raw materials	$	37,681	$	32,185
Work in process and semi-finished goods	Work in process and semi-finished goods	23,061		21,320		Work in process and semi-finished goods	25,454		24,642
Finished goods	Finished goods	14,946		11,976		Finished goods	17,054		16,919
		$	63,296	$	54,706		$	80,189	$	73,746

Note 78 - Property, Plant and Equipment

Property, plant and equipment consist of the following (in thousands):


			As of						As of
		Useful life (years)	June 30, 2021		December 31, 2020			Useful life (years)	June 30, 2022		December 31, 2021
Automobile	Automobile	3	$	113	$	34	Automobile	3	$	111	$	114
Computer hardware and software	Computer hardware and software	3-5	5,806		4,840		Computer hardware and software	3 - 5	8,385		6,594
Manufacturing and lab equipment	Manufacturing and lab equipment	2-7	73,360		69,849		Manufacturing and lab equipment	2 - 7	87,095		81,130
Office equipment and furniture	Office equipment and furniture	5-7	1,849		1,605		Office equipment and furniture	5 - 7	2,347		2,361
Leasehold and building improvements	Leasehold and building improvements	2-12	25,675		21,934		Leasehold and building improvements	2 - 12	30,471		28,125
Buildings	Buildings	30	9,392		9,081		Buildings	30	9,392		9,392
Land	Land	N/A	3,399		3,399		Land	N/A	3,399		3,399
			119,594		110,742				141,200		131,115
Accumulated depreciation	Accumulated depreciation		(70,216)		(66,262)		Accumulated depreciation		(78,952)		(75,014)
			$	49,378	$	44,480			$	62,248	$	56,101

Table of Contents

Note 89 - Intangible Assets and Goodwill

Intangibles

The details of amortizing intangible assets are as follows (in ~~thousands, except for estimated useful lives)~~thousands):


		Estimated useful life (in years)	As of					Estimated useful life (in years)	As of
			June 30, 2021		December 31, 2020				June 30, 2022		December 31, 2021
Patents	Patents	3 - 5	$	5,887	$	6,199	Patents	3 - 5	$	6,185	$	5,986
Development programs	Development programs	2 - 4	7,200		7,200		Development programs	2 - 4	7,200		7,200
Developed technology	Developed technology	5	1,125		1,226		Developed technology	5	2,888		3,038
			14,212		14,625				16,273		16,224
Accumulated amortization	Accumulated amortization		(7,693)		(6,280)		Accumulated amortization		(10,976)		(9,526)
			$	6,519	$	8,345			$	5,297	$	6,698

Amortization related to intangible assets was as follows (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Amortization expense	$	711	$	1,026	$	1,487	$	2,042

Estimated amortization expense for future years is as follows (in thousands):


Remainder of 2021		$	1,883
2022		2,402
Remainder of 2022				Remainder of 2022	$	1,433
2023	2023	1,720		2023	2,187
2024	2024	378		2024	879
2025	2025	136		2025	505
2026				2026	293

		$	6,519		$	5,297

Goodwill

The carrying amount of goodwill by segment ~~was~~is as follows (in thousands):

Laser Products Advanced Development Totals
Balance, December 31, 2020 $ 2,236 $ 10,248 $ 12,484
Currency exchange rate adjustment (27) 0 (27)
Balance, June 30, 2021 $ 2,209 $ 10,248 $ 12,457


	Laser Products		Advanced Development		Totals




Balance, December 31, 2021	2,172		10,248		12,420
Currency exchange rate adjustment	(61)		—		(61)
Balance, June 30, 2022	$	2,111	$	10,248	$	12,359

Note 910 - Accrued Liabilities

Accrued liabilities consist of the following (in thousands):


		As of					As of
		June 30, 2021		December 31, 2020			June 30, 2022		December 31, 2021
Accrued payroll and benefits	Accrued payroll and benefits	$	12,293	$	10,770	Accrued payroll and benefits	$	9,192	$	10,915
Product warranty, current	Product warranty, current	2,246		2,122		Product warranty, current	2,325		2,286

Income tax payable		53		401

Other accrued expenses	Other accrued expenses	972		2,028		Other accrued expenses	1,621		1,529
		$	15,564	$	15,321		$	13,138	$	14,730

Table of Contents

Note 1011 - Product Warranties

We provide warranties on certain products and record a liability for the estimated future costs associated with warranty claims at the time revenue is recognized. The warranty liability is based on historical experience, any specifically identified failures, and our estimate of future costs. The current portion of our product warranty liability is included in the accrued liabilities and the long-term portion is included in other long-term liabilities in our Consolidated Balance Sheets.

Product warranty liability activity was as follows for the periods presented (in thousands):


		Six Months Ended June 30,					Six Months Ended June 30,
		2021		2020			2022		2021
Product warranty liability, beginning	Product warranty liability, beginning	$	4,711	$	2,984	Product warranty liability, beginning	$	5,371	$	4,711
Warranty charges incurred, net	Warranty charges incurred, net	(1,132)		(1,531)		Warranty charges incurred, net	(409)		(1,132)
Provision for warranty charges, net of adjustments	Provision for warranty charges, net of adjustments	1,779		2,271		Provision for warranty charges, net of adjustments	198		1,779
Acquired warranty		0		100

Product warranty liability, ending	Product warranty liability, ending	5,358		3,824		Product warranty liability, ending	5,160		5,358
Less: current portion of product warranty liability	Less: current portion of product warranty liability	(2,246)		(1,918)		Less: current portion of product warranty liability	(2,325)		(2,246)
Non-current portion of product warranty liability	Non-current portion of product warranty liability	$	3,112	$	1,906	Non-current portion of product warranty liability	$	2,835	$	3,112

Note 1112 - Commitments and Contingencies

Leases

See Note ~~12.~~13.

Legal Matters

On March 25, 2022, Lumentum Operations LLC filed a complaint against nLIGHT, Inc. and certain of its employees in the U.S. District Court for the Western District of Washington. The complaint alleges that Lumentum is the partial or full owner of certain of our patents and requests corresponding relief from the court. We intend to vigorously defend against Lumentum’s allegations.

From time to time, we may be subject to various other legal proceedings and claims in the ordinary course of business. AsWe do not believe the ultimate resolution of ~~June 30, 2021, and as~~these matters will have a material adverse effect on our consolidated financial position, results of ~~the filing of this Quarterly Report on Form 10-Q, we were not involved in any material legal proceedings.~~operations, or cash flows.

Note 1213 - Leases

We lease real estate space under non-cancelable operating lease agreements for commercial and industrial space. Facilities-related operating leases have remaining terms of 0.3 to ~~13.9~~12.9 years, and some leases include options to extend up to 15 years. Other leases for automobiles, manufacturing and office and computer equipment have remaining lease terms of ~~0.1~~0.6 to ~~4.9~~3.9 years. These leases are primarily operating leases; financing leases are not material. We did not include any renewal options in our lease terms for calculating the lease liabilities as we are not reasonably certain we will exercise the options at this time. The weighted-average remaining lease term for the lease obligations was 98 years atas of June 30, ~~2021,~~2022, and the weighted-average discount rate was 3.6%.

The components of lease expense related to operating leases were as follows (in thousands):

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Lease expense:
Operating lease expense $ 1,092 $ 651 $ 1,966 $ 1,420
Short-term lease expense 210 31 283 118
Variable and other lease expense 235 107 357 253
$ 1,537 $ 789 $ 2,606 $ 1,791


		Three Months Ended June 30,				Six Months Ended June 30,
		2022		2021			2022		2021
Lease expense:
	Operating lease expense	$	965	$	1,092		$	1,996	$	1,966
	Short-term lease expense	131		210			252		283
	Variable and other lease expense	241		235			435		357
		$	1,337	$	1,537		$	2,683	$	2,606

~~Table of Contents~~

Future minimum payments under our non-cancelable lease obligations were as follows as of June 30, ~~2021~~2022 (in thousands):

Remainder of 2021 $ 1,819
2022 3,299
2023 2,479
2024 2,345
2025 1,896
Thereafter 10,011
Total minimum lease payments 21,849
Less: interest (3,423)
Present value of net minimum lease payments 18,426
Less: current portion of lease liabilities (2,921)
Total long-term lease liabilities $ 15,505

Table of Contents


Remainder of 2022	$	1,956
2023	3,234
2024	2,833
2025	2,013
2026	1,631
Thereafter	8,451
Total minimum lease payments	20,118
Less: interest	(2,969)
Present value of net minimum lease payments	17,149
Less: current portion of lease liabilities	(3,032)
Total long-term lease liabilities	$	14,117

Note 1314 - Stockholders' Equity and Stock-Based Compensation

~~Public Offering~~

In March 2021, we closed a follow-on public offering in which we issued and sold approximately 2.5 million shares of common stock (including approximately 0.3 million shares sold pursuant to the full exercise of the underwriters option to purchase additional shares) at an offering price of $34.00 per share, resulting in aggregate net proceeds to us of approximately $82.4 million after deducting underwriting discounts, commissions and offering costs.

Restricted Stock Awards and Units

Restricted stock award (RSA) and restricted stock unit (RSU) activity under our equity incentive plan was as follows (in thousands, except weighted-average grant date fair values):

Number of Restricted Stock Awards Weighted-Average Grant Date Fair Value
RSAs at December 31, 2020 653 $ 21.30
Awards granted 0 0
Awards vested (124) 21.88
RSAs at June 30, 2021 529 $ 21.16


		Number of Restricted Stock Awards	Weighted-Average Grant Date Fair Value
RSAs at December 31, 2021		753	$	25.63

	Awards vested	(171)	25.10
	Awards forfeited	(140)	25.21
RSAs at June 30, 2022		442	25.97

RSAs forfeited were in connection with our former chief financial officer's transition agreement dated January 18, 2022.

Number of Restricted Stock Units Weighted-Average Grant Date Fair Value
RSUs at December 31, 2020 2,800 $ 20.54
Awards granted 125 35.12
Awards vested (420) 23.17
Awards forfeited (19) 22.51
RSUs at June 30, 2021 2,486 $ 20.81


		Number of Restricted Stock Units	Weighted-Average Grant Date Fair Value
RSUs at December 31, 2021		2,799	$	24.41
	Awards granted	78	15.61
	Awards vested	(576)	26.47
	Awards forfeited	(143)	26.03
RSUs at June 30, 2022		2,158	23.45

The total fair value of RSAs and RSUs vested during the six months ended June 30, ~~2021~~2022, was ~~$2.7~~$4.3 million and ~~$9.7~~$15.3 million, respectively. Awards outstanding as of June 30, ~~2021~~2022 include 0.7 million performance-based awards that will vest upon meeting certain performance criteria.

~~Table of Contents~~

Stock Options

The following table summarizes our stock option activity during the six months ended June 30, ~~2021~~2022 (in thousands, except weighted-average exercise prices):

Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (Years) Aggregate Intrinsic Value
Outstanding, December 31, 2020 3,358 $1.53 5.3 $104,510
Options exercised (553) $1.39
Options canceled (2) $4.10
Outstanding, June 30, 2021 2,803 $1.55 4.9 $97,345
Options exercisable at June 30, 2021 2,416 $1.18 4.7 $84,789
Options vested as of June 30, 2021 and expected to vest after June 30, 2021 2,803 $1.55 4.9 $97,345

Table of Contents


	Number of Options	Weighted-Average Exercise Price	Weighted-Average Remaining Contractual Term (Years)	Aggregate Intrinsic Value
Outstanding, December 31, 2021	2,454	$1.61	4.4	$54,815

Options exercised	(471)	$1.62
Options canceled	(41)	$9.44
Outstanding, June 30, 2022	1,942	$1.44	3.8	$17,037
Options exercisable at June 30, 2022	1,916	$1.41	3.8	$16,890
Options vested as of June 30, 2022, and expected to vest after June 30, 2022	1,942	$1.44	3.8	$17,037

Total intrinsic value of options exercised for the six months ended June 30, 2022 and 2021, ~~and 2020~~ was ~~$17.8~~$6.9 million and ~~$8.8~~$17.8 million, respectively. We received proceeds of $0.8 million and ~~$0.9~~$0.8 million from the exercise of options for ~~each of~~ the six months ended June 30, 2022 and 2021, ~~and 2020.~~respectively.

Employee Stock Purchase Plan

Information related to activity under our Employee Stock Purchase Plan ~~(ESPP)~~ was as follows (in thousands, except weighted average per share prices):






	Six Months Ended June 30, ~~2021~~2022
Shares issued	33118
Weighted-average per share purchase price	$	~~22.41~~10.15
Weighted-average per share discount from the fair value of our common stock on date of issuance	$	~~3.95~~1.79

Stock-Based Compensation

Total stock-based compensation expense was included in our consolidated statements of operations as follows (in thousands):


		Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended June 30,				Six Months Ended June 30,
		2021		2020		2021		2020				2022		2021		2022		2021
Cost of revenues	Cost of revenues	$	549	$	339	$	1,040	$	684		Cost of revenues	$	684	$	549	$	1,393	$	1,040
Research and development	Research and development	3,708		2,275		6,626		4,057			Research and development	3,117		3,708		6,239		6,626
Sales, general and administrative	Sales, general and administrative	7,349		3,423		11,994		5,059			Sales, general and administrative	2,879		7,349		5,601		11,994
		$	11,606	$	6,037	$	19,660	$	9,800			$	6,680	$	11,606	$	13,233	$	19,660

Unrecognized Compensation Costs

As of June 30, ~~2021,~~2022, total unrecognized stock-based compensation was ~~$53.2~~$46.1 million, which will be recognized over an average expected recognition period of 2.3 years.

Common Stock Repurchase Plan

On November 14, 2019, our Board of Directors authorized the repurchase of up to $10.0 million of our outstanding shares of common stock. As of June 30, ~~2021, 0~~2022, no repurchases had been executed under the program.

Table of Contents

Note 1415 - Segment Information

We operate in 2 reportable segments consisting of the Laser Products segment and the Advanced Development segment. The following table summarizes the operating results by reportable segment for the periods presented (dollars in thousands):


		Three Months Ended June 30, 2021												Three Months Ended June 30, 2022
		Laser Products			Advanced Development			Corporate and Other		Totals				Laser Products			Advanced Development			Corporate and Other		Totals
Revenue	Revenue	$	53,561		$	15,552		$	0	$	69,113		Revenue	$	48,180		$	12,647		$	—	$	60,827
Gross profit	Gross profit	$	19,871		$	1,004		$	(550)	$	20,325		Gross profit	$	15,182		$	888		$	(685)	$	15,385
Gross margin	Gross margin	37.1		%	6.5		%	NM		29.4		%	Gross margin	31.5		%	7.0		%	NM		25.3		%


		Six Months Ended June 30, 2021												Six Months Ended June 30, 2022
		Laser Products			Advanced Development			Corporate and Other		Totals				Laser Products			Advanced Development			Corporate and Other		Totals
Revenue	Revenue	$	100,896		$	29,562		$	0	$	130,458		Revenue	$	99,241		$	26,045		$	—	$	125,286
Gross profit	Gross profit	$	37,302		$	1,709		$	(1,041)	$	37,970		Gross profit	$	31,184		$	1,772		$	(1,394)	$	31,562
Gross margin	Gross margin	37.0		%	5.8		%	NM		29.1		%	Gross margin	31.4		%	6.8		%	NM		25.2		%


		Three Months Ended June 30, 2020												Three Months Ended June 30, 2021
		Laser Products			Advanced Development			Corporate and Other		Totals				Laser Products			Advanced Development			Corporate and Other		Totals
Revenue	Revenue	$	45,104		$	7,034		$	0	$	52,138		Revenue	$	53,561		$	15,552		$	—	$	69,113
Gross profit	Gross profit	$	12,846		$	549		$	(339)	$	13,056		Gross profit	$	19,871		$	1,004		$	(550)	$	20,325
Gross margin	Gross margin	28.5		%	7.8		%	NM		25.0		%	Gross margin	37.1		%	6.5		%	NM		29.4		%


		Six Months Ended June 30, 2020												Six Months Ended June 30, 2021
		Laser Products			Advanced Development			Corporate and Other		Totals				Laser Products			Advanced Development			Corporate and Other		Totals
Revenue	Revenue	$	82,034		$	13,319		$	0	$	95,353		Revenue	$	100,896		$	29,562		$	—	$	130,458
Gross profit	Gross profit	$	22,221		$	1,020		$	(684)	$	22,557		Gross profit	$	37,302		$	1,709		$	(1,041)	$	37,970
Gross margin	Gross margin	27.1		%	7.7		%	NM		23.7		%	Gross margin	37.0		%	5.8		%	NM		29.1		%

Corporate and Other is unallocated expenses related to stock-based compensation.

There have been no material changes to the geographic locations of our long‑lived assets, net, based on the location of the assets, as disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

Note 1516 - Net Loss per Share

Basic and diluted net loss and the number of shares used for basic and diluted net loss calculations were the same for all ~~period~~periods presented because we were in a loss position.

The following potentially dilutive securities were not included in the calculation of diluted shares as the effect would have been anti‑dilutive (in thousands):


		Three Months Ended June 30,		Six Months Ended June 30,		Three Months Ended June 30,			Six Months Ended June 30,
		2021	2020	2021	2020			2022	2021	2022	2021

Restricted stock units and awards	Restricted stock units and awards	2,057	2,293	2,182	2,260		Restricted stock units and awards	1,158	2,057	1,241	2,182
Employee stock purchase plan	Employee stock purchase plan	3	20	6	0		Employee stock purchase plan	—	3	—	6
Common stock options	Common stock options	2,803	3,711	2,803	3,711		Common stock options	1,745	2,803	1,922	2,803
		4,863	6,024	4,991	5,971			2,903	4,863	3,163	4,991

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In some cases, you can identify forward-looking statements by the following words: "ability," "anticipate," "attempt," "believe," "can be," "continue," "could," "depend," "enable," "estimate," "expect," "extend," "grow," "if," "intend," "likely," "may," "objective," "ongoing," "plan," "possible," "potential," "predict," "project," "propose," "rely," "should," "target," "will," "would" or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words.

These statements involve risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from the information expressed or implied by these forward-looking statements. Although we believe that we have a reasonable basis for each forward-looking statement, we caution you that these statements are based on a combination of facts and factors currently known by us and our projections of the future, about which we cannot be certain. Forward-looking statements include, but are not limited to, statements about: ~~our ability to develop new technology, designs and applications for our lasers;~~ the ~~implementation of~~impact on our business ~~model~~from the COVID-19 pandemic and ~~strategic plans, including estimates regarding future sales, revenues, expenses, acquisitions, investments and capital requirements; our future financial performance; our utilization~~the related lockdown in Shanghai; the impact of ~~vertical integration; our ability to adequately protect our intellectual property rights;~~inflation; the effect on our business of litigation to which we are or may become a party; and the sufficiency of our existing liquidity sources to meet our cash ~~needs; and our ability to sustain and manage growth in our business.~~needs.

You should refer to the "Risk Factors" section of this report ~~and those risk factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2020~~ for a discussion of other important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a result of these factors, we cannot assure you that the forward-looking statements in this report will prove to be accurate. In addition, statements that "we believe" and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date of this report, which although we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted a thorough inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain and investors are cautioned not to unduly rely upon these statements. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Overview

nLIGHT, Inc., is a leading provider of high‑power semiconductor and fiber lasers for industrial, microfabrication, and aerospace and defense applications. Headquartered in Camas, Washington, we design, develop, and manufacture the critical elements of our lasers, and believe our vertically integrated business model enables us to rapidly introduce innovative products, control our costs and protect our intellectual property.

We operate in two reportable segments consisting of the Laser Products segment and the Advanced Development segment. Sales of our semiconductor lasers, fiber lasers and directed energy products are included in the Laser Products segment, while revenue earned from research and development contracts are included in the Advanced Development segment.

Revenues ~~increased~~decreased to ~~$130.5~~$125.3 million in the six months ended June 30, ~~2021~~2022 compared to ~~$95.4~~$130.5 million in the same period of ~~2020~~2021 as a result of ~~higher~~a decrease in development revenue ~~across all end markets.~~and product sales to customers in China, that was partially offset by an increase in product sales to customers outside of China. We generated a net loss of $19.0 million for the six months ended June 30, 2022 compared to a net loss of $14.0 million for the ~~six months ended June 30, 2021 compared to a net loss of $14.3 million for the~~ same period of ~~2020.~~2021.

Factors Affecting Our Performance

Impact of the COVID-19 Pandemic

Table of Contents

~~Factors Affecting~~The COVID-19 pandemic and related global liquidity concerns and significant macro-economic volatility continues to adversely impact our end-markets, including reduced economic activity and demand for our products, delays in new capital expenditure decisions and implementations, and restrictions on individual and business activities and travel. While our manufacturing operations have generally remained open throughout the pandemic, including our manufacturing facilities in the United States, which are considered essential businesses, the recent COVID-related lockdown of Shanghai by the Chinese government forced us to halt operations in our Shanghai manufacturing facility for approximately two months during the second quarter during 2022. Our ~~Performance~~Shanghai facility manufactures products that are sold directly to end customers as well as components that are shipped to our facilities in the United States to be integrated into finished products. Although we are increasing our manufacturing capabilities in the United States, our Shanghai manufacturing facility remains an important part of our global operations.

~~For factors affecting our performance, reference is made to Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations," contained in Part II~~The closure of our ~~Annual Report~~Shanghai facility during the second quarter of 2022 had a negative impact on ~~Form 10-K~~our financial results for the ~~year ended December 31, 2020. There~~second quarter of 2022, and any additional closures could have an adverse impact on future periods. In addition to the impact of the lockdown in Shanghai, some of our non-manufacturing personnel have been ~~no material~~partially working from home since March 2020. In recent periods, labor issues have become more pronounced as a result of the COVID-19 pandemic and we have experienced higher than expected increases in wages and other compensation costs as well as increased competition for qualified employees.

There are ongoing related risks to our business depending on the progression of the COVID-19 pandemic, including from the potential returns to limited or closed government functions, business activities and person-to-person interactions. Global trade conditions may further adversely impact us and our industry. For example, pandemic-related issues have exacerbated port congestion and caused intermittent supplier shutdowns and delays, resulting in additional expenses and challenges to obtaining critical parts. The full impact of the COVID-19 pandemic on our financial condition and results of operations will depend on future events and developments, such as the duration and magnitude of the pandemic and the conditions and timing under which restrictions will be lifted or re-imposed, impacts on our supply and distribution chains as well as our customers, the demand for our products and whether the pandemic leads to recessionary conditions in any of our key markets.

Demand for our Semiconductor and Fiber Laser Solutions

In order to continue to grow our revenues, we must continue to achieve design wins for our semiconductor and fiber lasers. We consider a design win to occur when a customer notifies us that it has selected one of our products to be incorporated into a product or system under development by such customer. For the foreseeable future, our operations will continue to depend upon capital expenditures by customers in the Industrial and Microfabrication markets, which, in turn, depend upon the demand for these customers’ products or services. In addition, in the Aerospace and Defense market, our business depends in large part on continued investment in laser technology by the U.S. government and its allies, and our ability to continue to successfully develop leading technology in this area and commercialize that technology in the future.

Demand for our products also fluctuates based on market cycles, continuously evolving industry supply chains, trade and tariff terms, as well as evolving competitive dynamics in each of our end-markets. Erosion of average selling prices, or ASPs, of established products is typical in our industry, and the ASPs of our products generally decrease as our products mature. We may also negotiate discounted selling prices from time to time with certain customers that purchase higher volumes, or to penetrate new markets or applications. Historically, we have been able to offset decreasing ASPs by introducing new and higher value products, increasing the sales of our existing products, expanding into new applications and reducing our manufacturing costs. Although we anticipate further increases in product volumes and the continued introduction of new and higher value products, ASP reduction may cause our revenues to decline or grow at a slower rate.

Technology and New Product Development

We invest heavily in the development of our semiconductor, fiber laser and directed energy technologies to provide solutions to our current and future customers. We anticipate that we will continue to invest in research and development to achieve our technology and product roadmap. Our product development is targeted to specific sectors of the market where we believe the power and performance requirements of our products can provide the most benefit. We believe our close coordination with our customers regarding their future product requirements enhances the efficiency of our research and development expenditures.

Manufacturing Costs and Gross Margins

Table of Contents

Our product gross profit, in absolute dollars and as a percentage of revenues, is impacted by our product sales mix, sales volumes, changes in ASPs, production volumes, the corresponding absorption of manufacturing overhead expenses, production costs and manufacturing yields. Our product sales mix can affect gross profits due to variations in profitability related to product configurations and cost profiles, customer volume pricing, availability of competitive products in various markets, and new product introductions, among other factors. Capacity utilization affects our gross margin because we have a high fixed cost base due to our vertically integrated business model. Increases in sales and production volumes drive favorable absorption of fixed costs, improved manufacturing efficiencies and lower production costs. Gross margins may fluctuate from period to period depending on product mix and the level of capacity utilization.

Our Development gross profit varies with the type and terms of contracts, contract volume, project mix, and progress on projects during the period. Most of our Development contracts are structured as cost plus fixed fee due to the ~~factors affecting~~technical complexity of the research and development services.

Seasonality

Our quarterly revenues can fluctuate with general economic trends, holidays in foreign countries such as Chinese New Year in the first quarter of our ~~performance since December 31, 2020.~~fiscal year, the timing of capital expenditures by our customers, and general economic trends. In addition, as is typical in our industry, we tend to recognize a larger percentage of our quarterly revenues in the last month of the quarter, which may impact our working capital trends.

Results of Operations

The following table sets forth our operating results as a percentage of revenues for the periods ~~indicated:~~

Three Months Ended June 30, Six Months Ended June 30,
2021 2020 2021 2020
Revenue:
Products 77.5 % 86.5 % 77.3 % 86.0 %
Development 22.5 13.5 22.7 14.0
Total revenue 100.0 100.0 100.0 100.0
Cost of revenue:
Products 49.5 62.5 49.5 63.4
Development 21.1 12.5 21.4 12.9
Total cost of revenue 70.6 75.0 70.9 76.3
Gross profit 29.4 25.0 29.1 23.7
Operating expenses:
Research and development 20.7 18.1 19.9 18.9
Sales, general, and administrative 21.8 18.5 20.5 18.2
Total operating expenses 42.5 36.6 40.4 37.1
Loss from operations (13.1) (11.6) (11.3) (13.4)
Other income (expense):
Interest income (expense), net — (0.1) (0.1) 0.2
Other income (expense), net 0.2 (0.6) 0.1 (0.4)
Loss before income taxes (12.9) (12.3) (11.3) (13.6)
Income tax expense (benefit) (1.5) 0.8 (0.5) 1.4
Net loss (11.4) % (13.1) % (10.8) % (15.0) %

~~Revenues by Segment~~

~~Our revenues by segment were as follows for the periods presented (dollars in thousands):~~

Three Months Ended June 30, Change
2021 % of Revenue 2020 % of Revenue $ %
Laser Products $ 53,561 77.5 % $ 45,104 86.5 % $ 8,457 18.8 %
Advanced Development 15,552 22.5 7,034 13.5 8,518 121.1
$ 69,113 100.0 % $ 52,138 100.0 % $ 16,975 32.6 %

Six Months Ended June 30, Change
2021 % of Revenue 2020 % of Revenue $ %
Laser Products $ 100,896 77.3 % $ 82,034 86.0 % $ 18,862 23.0 %
Advanced Development 29,562 22.7 13,319 14.0 16,243 122.0
$ 130,458 100.0 % $ 95,353 100.0 % $ 35,105 36.8 %

~~Table of Contents~~

The increase in Laser Products revenue for the three and six months ended June 30, 2021, compared to the same period of 2020, was driven by increased sales from the Industrial and Microfabrication markets as discussed below. The increase in Advanced Development revenue was primarilyindicated (which may not add up due to ~~increased activity on existing research and development contracts.~~rounding):


	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenue:
Products	79.2	%	77.5	%	79.2	%	77.3	%
Development	20.8		22.5		20.8		22.7
Total revenue	100.0		100.0		100.0		100.0
Cost of revenue:
Products	55.4		49.5		55.4		49.5
Development	19.3		21.1		19.4		21.4
Total cost of revenue	74.7		70.6		74.8		70.9
Gross profit	25.3		29.4		25.2		29.1
Operating expenses:
Research and development	22.7		20.7		21.9		19.9
Sales, general, and administrative	19.6		21.8		18.1		20.5
Total operating expenses	42.3		42.5		40.0		40.4
Loss from operations	(17.0)		(13.1)		(14.8)		(11.3)
Other income (expense):
Interest income (expense), net	0.1		—		0.1		(0.1)
Other income (loss), net	(0.2)		0.2		(0.1)		0.1
Loss before income taxes	(17.1)		(12.9)		(14.8)		(11.3)
Income tax expense (benefit)	—		(1.5)		0.3		(0.5)
Net loss	(17.1)	%	(11.4)	%	(15.1)	%	(10.8)	%

Revenues by End Market

Our revenues by end market were as follows for the periods presented (dollars in thousands):

Three Months Ended June 30, Change
2021 % of Revenue 2020 % of Revenue $ %
Industrial $ 24,907 36.1 % $ 22,630 43.4 % $ 2,277 10.1 %
Microfabrication 20,274 29.3 14,300 27.4 5,974 41.8
Aerospace and Defense 23,932 34.6 15,208 29.2 8,724 57.4
$ 69,113 100.0 % $ 52,138 100.0 % $ 16,975 32.6 %

Table of Contents


	Three Months Ended June 30,								Change
	2022		% of Revenue		2021		% of Revenue		$		%
Industrial	$	21,899	36.0	%	$	24,907	36.1	%	$	(3,008)	(12.1)	%
Microfabrication	16,415		27.0		20,274		29.3		(3,859)		(19.0)
Aerospace and Defense	22,513		37.0		23,932		34.6		(1,419)		(5.9)
	$	60,827	100.0	%	$	69,113	100.0	%	$	(8,286)	(12.0)	%


		Six Months Ended June 30,								Change					Six Months Ended June 30,								Change
		2021		% of Revenue		2020		% of Revenue		$		%			2022		% of Revenue		2021		% of Revenue		Amount		%
Industrial	Industrial	$	46,307	35.5	%	$	38,620	40.5	%	$	7,687	19.9	%	Industrial	$	45,895	36.6	%	$	46,307	35.5	%	$	(412)	(0.9)	%
Microfabrication	Microfabrication	35,489		27.2		24,719		25.9		10,770		43.6		Microfabrication	33,734		26.9		35,489		27.2		(1,755)		(4.9)
Aerospace and Defense	Aerospace and Defense	48,662		37.3		32,014		33.6		16,648		52.0		Aerospace and Defense	45,657		36.5		48,662		37.3		(3,005)		(6.2)
		$	130,458	100.0	%	$	95,353	100.0	%	$	35,105	36.8	%		$	125,286	100.0	%	$	130,458	100.0	%	$	(5,172)	(4.0)	%

The ~~increases~~decreases in revenue from the Industrial ~~market~~and Microfabrication markets for the three and six months ended June 30, 2021, compared to the same period of 2020, were driven by increases in unit sales, partially offset by lower average selling prices due to changes in product mix. The increases in revenue from the Microfabrication market for the three and six months ended June 30, 2021,2022, compared to the same periods of ~~2020,~~2021, were driven by decreases in unit sales in China, partially offset by increases in ~~demand and~~ unit sales outside of ~~semiconductor lasers.~~China. The ~~increases~~closure of our Shanghai facility for approximately two months during the second quarter of 2022 due to the COVID-19 pandemic had a negative impact on sales in China. The decreases in revenue from the Aerospace and Defense market for the three and six months ended June 30, ~~2021,~~2022, compared to the same periods of ~~2020,~~2021, were primarily due to ~~increased~~decreased activity on ~~existing~~ research and development contracts.

Revenues by Segment

Our revenues by segment were as follows for the periods presented (dollars in thousands):


	Three Months Ended June 30,								Change
	2022		% of Revenue		2021		% of Revenue		$		%
Laser Products	$	48,180	79.2	%	$	53,561	77.5	%	$	(5,381)	(10.0)	%
Advanced Development	12,647		20.8		15,552		22.5		(2,905)		(18.7)
	$	60,827	100.0	%	$	69,113	100.0	%	$	(8,286)	(12.0)	%


	Six Months Ended June 30,								Change
	2022		% of Revenue		2021		% of Revenue		Amount		%
Laser Products	$	99,241	79.2	%	$	100,896	77.3	%	$	(1,655)	(1.6)	%
Advanced Development	26,045		20.8		29,562		22.7		(3,517)		(11.9)
	$	125,286	100.0	%	$	130,458	100.0	%	$	(5,172)	(4.0)	%

The decreases in Laser Products revenue for the three and six months ended June 30, 2022, compared to the same periods of 2021, were driven by decreased sales to the Industrial and Microfabrication markets as discussed above. There was no significant change in Laser Product sales within the Aerospace and Defense market for the three and six months ended June 30, 2022, compared to the same periods of 2021. The decreases in Advanced Development revenue for the three and six months ended June 30, 2022, compared to the same periods of 2021 were primarily due to decreased activity on research and development contracts. Most of our Advanced Development revenue is generated from cost plus fixed fee research and development contracts, and all Advanced Development revenue is included in the Aerospace and Defense market.

Revenues by Geographic Region

Our revenues by geographic region were as follows for the periods presented (dollars in thousands):

Three Months Ended June 30, Change
2021 % of Revenue 2020 % of Revenue $ %
North America $ 33,095 47.9 % $ 20,494 39.3 % $ 12,601 61.5 %
China 18,759 27.1 21,495 41.2 (2,736) (12.7)
Rest of World 17,259 25.0 10,149 19.5 7,110 70.1
$ 69,113 100.0 % $ 52,138 100.0 % $ 16,975 32.6 %

Six Months Ended June 30, Change
2021 % of Revenue 2020 % of Revenue $ %
North America $ 64,229 49.2 % $ 41,540 43.6 % $ 22,689 54.6 %
China 34,336 26.3 33,537 35.2 799 2.4
Rest of World 31,893 24.4 20,276 21.2 11,617 57.3
$ 130,458 100.0 % $ 95,353 100.0 % $ 35,105 36.8 %

1819

Table of Contents


	Three Months Ended June 30,								Change
	2022		% of Revenue		2021		% of Revenue		$		%
North America	$	35,682	58.7	%	$	33,095	47.9	%	$	2,587	7.8	%
China	4,672		7.7		18,759		27.1		(14,087)		(75.1)
Rest of World	20,473		33.6		17,259		25.0		3,214		18.6
	$	60,827	100.0	%	$	69,113	100.0	%	$	(8,286)	(12.0)	%


	Six Months Ended June 30,								Change
	2022		% of Revenue		2021		% of Revenue		Amount		%
North America	$	70,826	56.5	%	$	64,229	49.2	%	$	6,597	10.3	%
China	11,811		9.4		34,336		26.3		(22,525)		(65.6)
Rest of World	42,649		34.1		31,893		24.4		10,756		33.7
	$	125,286	100.0	%	$	130,458	100.0	%	$	(5,172)	(4.0)	%

Geographic revenue information is based on the location to which we ship our products. The increases in both North America ~~revenue for the three~~ and six months ended June 30, 2021, compared to the same periods of 2020, were primarily driven by increased revenue from the Aerospace and Defense market. The decrease in China revenue for the three months ended June 30, 2021, compared to the same period of 2020, was primarily due to decreased sales in the Industrial market, while the increase in China revenue for the six months ended June 30, 2021, compared to the same period of 2020, was driven by higher sales in all markets. The increases in Rest of World revenue for the three and six months ended June 30, ~~2021,~~2022, compared to the same periods of ~~2020,~~2021, were primarily driven by increased revenue from the Industrial and Microfabrication markets, partially offset by a decrease in Development revenue from the Aerospace and Defense market. The decreases in China revenue for the three and six months ended June 30, 2022, compared to the same periods of 2021, were due to ~~increased~~decreased sales in the Industrial and Microfabrication markets, primarily as a result of deteriorating market conditions in the Industrial market. The closure of our Shanghai facility for approximately two months during the second quarter of 2022 due to the COVID-19 pandemic also had a negative impact on sales in China.

Cost of Revenues and Gross Margin

Cost of Laser Products revenue consists primarily of manufacturing materials, ~~payroll,~~labor, shipping and handling costs, tariffs and manufacturing-related overhead. We order materials and supplies based on backlog and forecasted ~~customer orders.~~demand from our customers. We expense all warranty costs and inventory provisions as cost of revenues.

Cost of Advanced Development revenue consists of materials, labor, subcontracting costs, and an allocation of indirect costs including overhead and general and administrative.

Our gross profit and gross margin were as follows for the periods presented (dollars in thousands):


	Three Months Ended June 30, 2022
	Laser Products			Advanced Development			Corporate and Other		Total
Gross profit	$	15,182		$	888		$	(685)	$	15,385
Gross margin	31.5		%	7.0		%	NM		25.3		%


	Six Months Ended June 30, 2022
	Laser Products			Advanced Development			Corporate and Other		Total
Gross profit	$	31,184		$	1,772		$	(1,394)	$	31,562
Gross margin	31.4		%	6.8		%	NM		25.2		%


	Three Months Ended June 30, 2021
	Laser Products			Advanced Development			Corporate and Other		Total
Gross profit	$	19,871		$	1,004		$	(550)	$	20,325
Gross margin	37.1		%	6.5		%	NM		29.4		%

Six Months Ended June 30, 2021
Laser Products Advanced Development Corporate and Other Total
Gross profit $ 37,302 $ 1,709 $ (1,041) $ 37,970
Gross margin 37.0 % 5.8 % NM 29.1 %

Table of Contents

Three Months Ended June 30, 2020
Laser Products Advanced Development Corporate and Other Total
Gross profit $ 12,846 $ 549 $ (339) $ 13,056
Gross margin 28.5 % 7.8 % NM 25.0 %


		Six Months Ended June 30, 2020												Six Months Ended June 30, 2021
		Laser Products			Advanced Development			Corporate and Other		Total				Laser Products			Advanced Development			Corporate and Other		Total
Gross profit	Gross profit	$	22,221		$	1,020		$	(684)	$	22,557		Gross profit	$	37,302		$	1,709		$	(1,041)	$	37,970
Gross margin	Gross margin	27.1		%	7.7		%	NM		23.7		%	Gross margin	37.0		%	5.8		%	NM		29.1		%

The ~~increases~~decreases in Laser Products gross margin for the three and six months ended June 30, ~~2021,~~2022, compared to the same periods of ~~2020,~~2021, were driven ~~primarily~~ by sales mix, ~~product cost improvements,~~ and ~~improved~~decreased factory utilization ~~from higher~~of our Shanghai manufacturing facility due to lower sales, and the closure of our Shanghai facility for approximately two months during the second quarter of 2022 due to the COVID-19 pandemic. In addition, Laser Products gross margin was negatively impacted by increased investments in U.S. based manufacturing, and increased production ~~volume.~~and freight costs, partially offset by an increase in duty reclaim. The ~~decreases~~increases in Advanced Development gross margin for the three and six months ended June 30, ~~2021,~~2022, compared to the same periods of ~~2020,~~2021, were primarily due to changes in the composition of research and development contracts.

~~Table of Contents~~

Operating Expenses

Our operating expenses were as follows for the periods presented (dollars in thousands):

Research and Development

Three Months Ended June 30, Change
2021 2020 $ %
Research and development $ 14,282 $ 9,472 $ 4,810 50.8 %


	Three Months Ended June 30,				Change
	2022		2021		$		%
Research and development	$	13,788	$	14,282	$	(494)	(3.5)	%

Six Months Ended June 30, Change
2021 2020 $ %
Research and development $ 25,992 $ 18,010 $ 7,982 44.3 %


	Six Months Ended June 30,				Change
	2022		2021		Amount		%
Research and development	$	27,499	$	25,992	$	1,507	5.8	%

The ~~increases~~decrease in research and development expense for the three months ended June 30, 2022, compared to the same period in 2021, was primarily due to a decrease in stock-based compensation of $0.6 million. The increase in research and development expense for the six months ended June 30, ~~2021,~~2022, compared to the same ~~periods~~period in ~~2020, were~~2021, was primarily due to increases in ~~stock-based compensation of $1.4 million and $2.6 million, respectively, and increased employee~~salary costs, headcount and project-related expenses to support our development ~~efforts.~~efforts, partially offset by a decrease in stock-based compensation of $0.4 million, and decrease in intangible amortization.

Sales, General and Administrative

Three Months Ended June 30, Change
2021 2020 $ %
Sales, general, and administrative $ 15,057 $ 9,633 $ 5,424 56.3 %


	Three Months Ended June 30,				Change
	2022		2021		$		%
Sales, general, and administrative	$	11,914	$	15,057	$	(3,143)	(20.9)	%

Six Months Ended June 30, Change
2021 2020 $ %
Sales, general, and administrative $ 26,771 $ 17,333 $ 9,438 54.5 %


	Six Months Ended June 30,				Change
	2022		2021		Amount		%
Sales, general, and administrative	$	22,689	$	26,771	$	(4,082)	(15.2)	%

The ~~increases~~decreases in sales, general and administrative expense for the three and six months ended June 30, ~~2021,~~2022, compared to the same periods in ~~2020~~2021 were primarily due to ~~increase~~decreases in stock-based compensation of ~~$3.9~~$4.5 million and ~~$6.9~~$6.4 million, respectively, ~~and increased employee~~partially offset by increases in salary costs, ~~and~~ professional service fees, facility expenses and decreases in administrative cost allocated to ~~support our continued growth.~~development projects. The decreases in stock-based compensation expense were driven by forfeitures and decreases in expected achievement related to performance-based stock awards.

Table of Contents

Interest Income (Expense), net

Three Months Ended June 30, Change
2021 2020 $ %
Interest income (expense), net $ (32) $ (65) $ 33 50.8%


	Three Months Ended June 30,				Change
	2022		2021		$		%
Interest income (expense), net	$	71	$	(32)	$	103	(321.9)%

Six Months Ended June 30, Change
2021 2020 $ %
Interest income (expense), net $ (106) $ 218 $ (324) (148.6)%


	Six Months Ended June 30,				Change
	2022		2021		Amount		%
Interest income (expense), net	$	71	$	(106)	$	177	(167.0)	%

The ~~changes~~increase in interest income (expense), net, for the three and six months ended June 30, ~~2021,~~2022, compared to the same periods in ~~2020 were primarily attributable to decreases~~2021 was driven by increases in interest rates and the ~~market rates on money market funds, offset partially by~~investment in marketable securities during the ~~March 2021 cash infusion from our public offering~~second quarter of ~~stock.~~2022.

Other Income ~~(Expense)~~(Loss), net

Three Months Ended June 30, Change
2021 2020 $ %
Other income (expense), net $ 118 $ (298) $ 416 139.6%


	Three Months Ended June 30,				Change
	2022		2021		$		%
Other income (loss), net	$	(106)	$	118	$	(224)	(189.8)%


	Six Months Ended June 30,				Change
	2022		2021		Amount		%
Other income (loss), net	$	(77)	$	144	$	(221)	(153.5)	%

~~Table of Contents~~

Six Months Ended June 30, Change
2021 2020 $ %
Other income (expense), net $ 144 $ (414) $ 558 134.8%

~~The increases~~Changes in other income ~~(expense)~~(loss), net, ~~for the three and six months ended June 30, 2021, compared to the same periods in 2020 were~~are primarily attributable to changes in net realized and unrealized foreign exchange transactions resulting from currency rate fluctuations.

Income Tax Expense (Benefit)

Three Months Ended June 30, Change
2021 2020 $ %
Income tax expense (benefit) $ (1,038) $ 418 $ (1,456) (348.3) %


	Three Months Ended June 30,				Change
	2022		2021		$		%
Income tax expense (benefit)	$	(10)	$	(1,038)	$	1,028	(99.0)	%


	Six Months Ended June 30,				Change
	2022		2021		Amount		%
Income tax expense (benefit)	$	333	$	(716)	$	1,049	(146.5)	%

Six Months Ended June 30, Change
2021 2020 $ %
Income tax expense (benefit) $ (716) $ 1,323 $ (2,039) (154.1) %

We record income tax expense for taxes in our foreign jurisdictions including Finland, Italy, and Korea. WeWhile our tax expense is largely dependent on the geographic mix of earnings related to our foreign operations, we also record tax expense for uncertain tax positions taken and associated penalties and interest. We consider all available evidence, both positive and negative, in assessing the extent to which a valuation allowance should be applied against our deferred tax assets. Due to the uncertainty with respect to their ultimate realizability in the ~~U.S.~~United States, Austria, and China, we continue to maintain a full valuation allowance in ~~both~~these jurisdictions as of June 30, ~~2021.~~2022.

The ~~decreases~~increases in income tax expense for the three and six months ended June 30, ~~2021,~~2022, compared to the same periods in ~~2020~~2021 were driven by ~~decreases in income from our Finland operations and~~ a large discrete tax benefit related to return to provision true ups and expiring ~~statue~~statutes of ~~limitation~~limitations of unrecognized tax ~~positions. Our tax expense is dependent on the geographic mix of earnings and primarily related to our foreign operations.~~positions recorded in Q2 2021.

Table of Contents

Liquidity and Capital Resources

We had cash and cash equivalents of ~~$175.4~~$70.6 million and ~~$102.3~~$146.5 million as of June 30, ~~2021~~2022 and December 31, ~~2020,~~2021, respectively. In addition, we had marketable securities of $50.0 million at June 30, 2022. Prior to the second quarter of 2022 we had no marketable securities.

For the six months ended June 30, ~~2021,~~2022, our principal uses of liquidity were to fund our working capital ~~needs. Our principal sources of liquidity for the six months ended June 30, 2021 was from our equity offering~~needs and ~~cash flows from operations.~~

purchase property, plant and equipment. We believe our existing sources of liquidity will be sufficient to meet our working capital and capital expenditure needs for at least the next 12 months. ~~However, we may need to raise additional capital to expand the commercialization of our products, fund our operations and further our research and development activities.~~ Our future capital requirements may vary materially from period to period and will depend on many factors, including the timing and extent of spending on research and development efforts, the expansion of sales and marketing activities, the continuing market acceptance of our products and ongoing investments to support the growth of our business. We may in the future enter into arrangements to acquire or invest in complementary businesses, services, technologies and intellectual property rights. From time to time, we may explore additional financing sources which could include equity, equity‑linked and debt financing arrangements.

~~Table of Contents~~

The following table summarizes our cash flows for the periods presented (in thousands):

Six Months Ended June 30,
2021 2020
Net cash provided by operating activities $ 3,085 $ 7,002
Net cash used in investing activities (8,469) (17,668)
Net cash provided by financing activities 78,551 14,340
Effect of exchange rate changes on cash (126) (27)
Net increase in cash, cash equivalents and restricted cash $ 73,041 $ 3,647


	Six Months Ended June 30,
	2022		2021
Net cash provided by (used in) operating activities	$	(11,765)	$	3,085
Net cash used in investing activities	(63,121)		(8,469)
Net cash provided by (used in) financing activities	(583)		78,551
Effect of exchange rate changes on cash	(432)		(126)
Net increase (decrease) in cash, cash equivalents and restricted cash	$	(75,901)	$	73,041

Net Cash Provided by (Used in) Operating Activities

During the six months ended June 30, 2022, net cash used in operating activities was $11.8 million, which was the result of a $19.0 million net loss and use of cash for working capital of $15.2 million, partially offset by non‑cash expenses totaling $22.4 million related primarily to depreciation, amortization, and stock-based compensation. Changes in working capital were driven by a $5.0 million increase in accounts receivable, net, a $7.4 million increase in inventory, and a $1.7 million decrease in accounts payable. The increase in accounts receivable, net was primarily due to the timing of shipments in the second quarter of 2022 compared to the fourth quarter of 2021. The increase in inventory was due to an increase in safety stock to mitigate supply chain risks, lower demand primarily from China, and anticipated demand for recently introduced products. The decrease in accounts payable was due to timing of vendor payments.

During the six months ended June 30, 2021, net cash provided by operating activities was $3.1 million, which was primarily driven by non‑cash expenses totaling $28.6 million related to depreciation and amortization, stock-based compensation, and other items, a $3.3 million increase in accounts payable and a $1.3 million increase in accrued and other long-term liabilities. These items were partially offset by our net loss of $14.0 million and increases of $8.6 million in inventory and $4.8 million in accounts receivable. The increase in inventory was driven primarily by an expected increase in future period sales, the increase in accounts receivable was attributable to the increase in revenue and timing of shipments during the quarter, and the increase in accounts payable was attributable to the increase in inventory and the timing of vendor payments.

Net Cash Used in Investing Activities

During the six months ended June 30, ~~2020,~~2022, net cash ~~provided by operating~~used in investing activities was ~~$7.0~~$63.1 million, ~~which was~~ primarily ~~driven by non-cash expenses totaling $17.7~~resulting from the purchase of $50.0 million of marketable securities and $12.9 million of capital expenditures related to ~~depreciation~~investments in directed energy, manufacturing equipment and amortization, stock-based compensation, and other items, a $7.4 million increase in accounts payable and a $3.0 million decrease in account receivable. These items were partially offset by our net loss of $14.3 million, a $4.5 million increase in inventory, a $1.8 million increase in prepaid expenses and other current assets and a $2.1 million increase in other assets. The increase in inventory supported new product introductions, decreased customer lead times and increased safety stock. The increase in accounts payable was primarily driven by the timing of vendor payments.

~~Net Cash Used in Investing Activities~~facilities.

During the six months ended June 30, 2021, net cash used in investing activities was $8.5 million, primarily resulting from $8.0 million of capital expenditures related to investments in manufacturing equipment and improvements to our corporate facility.

Table of Contents

Net Cash Provided by (Used in) Financing Activities

During the six months ended June 30, ~~2020,~~2022, net cash used in ~~investing~~financing activities was ~~$17.7~~$0.6 million, which was primarily ~~resulting from $17.0~~driven by $2.5 million of ~~capital expenditures~~withholding tax payments related to the ~~acquisition~~vesting of ~~commercial property~~stock awards, partially offset by $2.0 million of proceeds from stock options exercises and ~~other investments in manufacturing equipment for our worldwide operations.~~

~~Net Cash Provided by Financing Activities~~employee stock plan purchases.

During the six months ended June 30, 2021, net cash provided by financing activities was $78.6 million, which was primarily driven by our follow-on public offering of $82.4 million, net of offering costs, and $1.5 million of proceeds from stock options exercises and employee stock program purchases, partially offset by $4.6 million of withholding tax payments related to the vesting of stock awards.

During the six months ended June 30, 2020, net cash provided by financing activities was $14.3 million, which was primarily driven by proceeds from our revolving line of credit of $15.0 million to acquire commercial property, and $1.5 million of proceeds from stock options exercises and employee stock program purchases, offset by $2.2 million of withholding tax payments related to the vesting of stock awards.

~~Table of Contents~~

Credit Facilities

We have a $40.0 million revolving line of credit, or LOC, with Pacific Western Bank dated September 24, 2018, which is secured by our assets and ~~expires in~~matures September 2021. Interest on the line of credit is based primarily on the London Interbank Offered Rate (LIBOR), or an alternative rate such as the Prime rate, plus or minus, respectively, a margin based on certain liquidity levels. 24, 2024.

The ~~loan~~LOC agreement contains restrictive and financial covenants and bears an unused credit fee of 0.20% on an annualized basis. ~~As of June 30, 2021, no~~The interest rate on the LOC is based on the Prime Rate, minus a margin based on our liquidity levels. No amounts were outstanding under the ~~line of credit,~~LOC at June 30, 2022 and we were in compliance with all ~~covenants under the loan agreement.~~covenants.

Contractual Obligations

For the six months ended June 30, ~~2021,~~2022, our operating lease obligations ~~increased~~decreased by approximately ~~$5.8~~$0.5 million. There have been no other material changes to our contractual obligations as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~

~~Off-Balance Sheet Arrangements~~

Since inception, we have not had any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or for another contractually narrow or limited purpose.2021.

Inflation

While we do not believe that inflation had a material effect on our business, financial condition or results of operations through June 30, ~~2021,~~2022, we have experienced ~~wage~~higher than expected increases in wages and ~~benefits increases during~~other compensation costs, materials, and shipping costs over the ~~three months ended June 30, 2021.~~past year. We expect ~~that those~~these increases will continue to impact our ~~labor costs.~~cost structure. If our costs ~~including labor costs, were to~~ become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could materially adversely affect our business, financial condition and results of operations.

~~Recent Accounting Pronouncements~~

~~See Note 1 of Notes to Consolidated Financial Statements.~~

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For financial market risks related to changes in interest rates and foreign currency exchange rates, reference is made to Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” contained in Part II of our Annual Report on Form 10-K for the year ended December 31, ~~2020. Our~~2021. Other than the addition of marketable securities consisting of U.S. Treasuries to our investment portfolio, our exposure to market risk has not changed materially since December 31, ~~2020.~~2021.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and our chief financial officer, have evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on that evaluation, our chief executive officer and our chief financial officer have concluded that, as of such date, our disclosure controls and procedures were, in design and operation, effective.

Changes in Internal Control over Financial Reporting

Our chief executive officer and our chief financial officer did not identify any changes in our internal control over financial reporting in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act during the three months ended June 30, ~~2021~~2022, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

2324

Table of Contents

Limitations on the Effectiveness of Internal Control

Control systems, including ours, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control systems’ objectives are being met. Further, the design of any control systems must reflect the fact that there are resource constraints, and the benefits of all controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include the realities that judgments in decision making can be faulty and that breakdowns can occur because of simple error or mistake. Control systems can also be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based, in part, on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures. We intend to continue to monitor and upgrade our internal controls as necessary or appropriate for our business, but cannot assure you that such improvements will be sufficient to provide us with effective internal control over financial reporting.

Table of Contents

PART II ~~- OTHER INFORMATION~~

ITEM 1. LEGAL PROCEEDINGS

~~We may, from time to time, be party to litigation and subject to claims incident to the ordinary course~~For a description of ~~business. As~~ our company matures, we may become party to an increasing number of litigation matters and claims. The outcome of litigation and claims cannot be predicted with certainty, and the resolution of these matters could materially adversely affect our business, financial condition, results of operations and growth prospects.

~~There have been no~~ material ~~changes to the~~pending legal proceedings, ~~disclosed~~see Note 12, Commitments and Contingencies, to our consolidated financial statements included elsewhere in ~~our Annual Report on Form 10-K for the year ended December 31, 2020.~~this report.

ITEM 1A. RISK FACTORS

For risk factors related to our business, reference is made to Item 1A, "Risk Factors," contained in Part I of our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021 and Item 1A, “Risk Factors,” contained in Part II our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022. There have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022.

The COVID-19 pandemic has disrupted our operations, manufacturing and supply chain and likely will continue to adversely affect our business, financial condition and operating results.

The COVID-19 pandemic and related global liquidity concerns and significant macro-economic volatility continues to adversely impact our end-markets, including reduced economic activity and demand for our products, delays in new capital expenditure decisions and implementations, and restrictions on individual and business activities and travel. Government imposed restrictions may limit our ability to manufacture our products in a timely manner or at all, and some of our non-manufacturing personnel have been partially working from home since March 2020. The recent COVID-related lockdown of Shanghai by the Chinese government forced us to halt operations in our Shanghai manufacturing for approximately two months during the second quarter of 2022. Our Shanghai facility manufactures products that are sold directly to end customers as well as components that are shipped to our facilities in the United States to be integrated into finished products. Although we are increasing our manufacturing capabilities in the United States, our Shanghai manufacturing facility remains an important part of our global operations. Any additional closures, or partial closures, of our Shanghai facility in the future could have an adverse impact on future periods.

In addition, travel has been severely limited during the COVID-19 pandemic due to government restrictions and other precautionary measures. Limitations on travel, for example, have impacted our management’s ability to visit our employees and facilities, particularly in China, as well as our vendors and potential and existing customers. Such limitations have adversely impacted and could continue to adversely impact oversight of our employees and facilities, our sales and marketing efforts, and our manufacturing and supply arrangements, potentially disrupting our business operations and adversely impacting our financial condition and operating results. In recent periods, labor issues have also become more pronounced as a result of the COVID-19 pandemic and we have experienced higher than expected increases in wages and other compensation costs as well as increased competition for qualified employees.

2426

Table of Contents

ITEM 6. EXHIBITS

(a) Exhibits

Exhibit
Number

Incorporated by Reference

Filed
Herewith

Exhibit
Number

Incorporated by Reference

Filed
Herewith

Description

Form

File No.

Exhibit

Filing Date

Description

Form

File No.

Exhibit

Filing Date

3.1

Amended and Restated Certificate of Incorporation of the Registrant

10-Q

001-38462

3.1

May 25, 2018

3.1

Amended and Restated Certificate of Incorporation of the Registrant

10-Q

001-38462

3.1

May 25, 2018

3.2

Amended and Restated Bylaws of the Registrant

8-K

001-38462

3.1

April 21, 2020

3.2

Amended and Restated Bylaws of the Registrant

8-K

001-38462

3.1

April 21, 2020

4.1

Specimen Common Stock Certificate of the Registrant

S-1/A

333-224055

4.1

April 16, 2018

4.1

Specimen Common Stock Certificate of the Registrant

S-1/A

333-224055

4.1

April 16, 2018

10.1

2018 Equity Incentive Plan—Form of Restricted Stock Unit Agreement (Performance-Based)

8-K

001-38462

10.1

July 8, 2022

31.1

Certification of the Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.1

Certification of the Chief Executive Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of the Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

Certification of the Chief Financial Officer pursuant to Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*

Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.1*

Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101.INS

Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.SCH

Inline XBRL Taxonomy Extension Schema Document

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


+			Indicates a management contract or compensatory plan or arrangement.
*			The certifications furnished in Exhibit 32.1 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference.

2527

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


		NLIGHT, INC.
		(Registrant)


August ~~6, 2021~~5, 2022	By:	/s/ SCOTT KEENEY
Date		Scott Keeney
		President and Chief Executive Officer (Principal Executive Officer)

August ~~6, 2021~~5, 2022	By:	/s/ ~~RAN BAREKET~~JOSEPH CORSO
Date		~~Ran Bareket~~Joseph Corso
		Chief Financial Officer (Principal Financial Officer)

August 5, 2022	By:	/s/ JAMES NIAS
Date		James Nias
		Chief Accounting ~~and Financial~~Officer (Principal Accounting Officer)

2628


Remainder of 2021	$	1,819
2022	3,299
2023	2,479
2024	2,345
2025	1,896
Thereafter	10,011
Total minimum lease payments	21,849
Less: interest	(3,423)
Present value of net minimum lease payments	18,426
Less: current portion of lease liabilities	(2,921)
Total long-term lease liabilities	$	15,505


		Number of Restricted Stock Awards	Weighted-Average Grant Date Fair Value
RSAs at December 31, 2020		653	$	21.30
	Awards granted	0	0
	Awards vested	(124)	21.88

RSAs at June 30, 2021		529	$	21.16


		Number of Restricted Stock Units	Weighted-Average Grant Date Fair Value
RSUs at December 31, 2020		2,800	$	20.54
	Awards granted	125	35.12
	Awards vested	(420)	23.17
	Awards forfeited	(19)	22.51
RSUs at June 30, 2021		2,486	$	20.81